Advance Accounting Assignment 1 Code 444 Autumn 2016 Solved, this solved assignment 1 code 444 for the autumn semester 2016 explains different classes of shares along with other questions relating to general entries of debentures showing in the balance sheet too. Joint venture accounts examples, what is consignment and consignment accounting examples. All these has been explained in hard form of this assignment. These questions can also be in aiou solved assignment 1 code 444 spring 2017.
AIOU SOLVED ADVANCED ACCOUNTING ASSIGNMENT 1 CODE 444 AUTUMN 2016
DIFFERENT CLASSES OF SHARES:-
A class of shares is a type of listed company stock that is differentiated by the level of voting rights shareholders receive. For example, a listed company might have two share classes, or classes of stock, designated as Class A and Class B. Owners of companies that have been privately owned and go public often create class A and B share structures with different voting rights in order to maintain control and/or to make the company a more difficult target for a takeover.
The following are description of some typical classes of shares.
1:- ORDINARY SHARES
Ordinary share capital is the capital that is received or given by the owners of business in exchange for shares. The directors must decide whether to declare a dividend out of the companies’ attributable profits. Ordinary shares usually rank after preference shares for the purpose of dividends and returns of capital but carry voting rights not normally attributed to preference shareholders. Companies may also decide to divide their ordinary shares into “A:” and “B” ordinary shares with different rights attached to each. For example, class “A” could have all the voting rights and class “B” could have all the dividend rights.
2:- PREFERENCE SHARES:-
Preference shares typically carry a preferential right to a fixed dividend and usually rank higher than other share of classes in the event of a winding up. The fixed rate of dividend is normally expressed as a percentage and the dividend is normally cumulative, unless stated otherwise. This means that should a company fail to pay a dividend it will accrue to the shareholder and become payable on the next payment date. The shares typically carry no voting rights nor do they carry further rights to participate in profits beyond the applicable dividend rate. These rights are generally set out in the company’s memorandum and articles of association.
3:- REDEEMABLE SHARES:-
Provided a limited company’s articles permit, a company may issue shares which can be redeemed by the company at their nominal value at some stated date in the future or at the director’s discretion, provided that there are sufficient attributable profits available, Section 210(4) of Companies Act 1990 provides that no shares shall be converted into redeemable shares, if, as a result of the conversion, the nominal value of the issued share capital, which is not redeemable, would be less than one tenth of the nominal value of the total issued share capital of the company. Redeemable shares offer a certain level of protection to the investor and allow control of the company to revert to those who controlled the company before the investor joined.
ASSIGNMENT 1 CODE 444 SEMESTER AUTUMN 2016 AIOU
4:- FOUNDER SHARES:-
These are sometimes issued to the founders of a company and usually carry enhanced rights over other classes of share, such as increased voting rights or an entitlement to surplus profits over a specified period. However, in practice, the issue of such shares is extremely rare.
5:- DEFERRED SHARES:-
Deferred shares commonly carry few rights, as their rights are deferred to the ordinary shares they usually carry no right to vote or participate in a distribution.
REASONS FOR CREATING DIFFERENT SHARE CLASSES:-
Common reasons for creating different share classes include confining control of companies to certain individuals, offering shares with preferential dividend rights so as to encourage investment or to have different entitlements to the payment of surplus funds on the winding up of the company.